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Is Your Fraud Strategy Ready for Black Friday?

Black Friday is quickly approaching and the weekend shopping forecast is bright. Consumer spending is expected to increase by 47% from the same period in 2016.1 This time period includes Cyber Monday, which holds the record for the largest online sales day in history—online shoppers spent $3.39 billion last year.2 And according to a RetailMeNot survey, the number of consumers planning to make purchases on Cyber Monday this year is almost 20% higher than in 2016.3

If these predictions hold true, brick-and-mortar as well as online retailers will be full of holiday cheer. But should they be more concerned about fraud as they prepare for this influx of shoppers ready to open their wallets and seize great deals? ID Analytics examined the impact of fraud during the peak retail season for our customers and discovered that Black Friday 2016 saw different fraud trends, depending on the industry.4

The analysis revealed that our customers saw a nearly 60% increase in bank and retail card application volumes in November and December of 2016 as compared to the rest of the year. Considering that the holiday shopping season typically brings out more shoppers, these results may not be surprising. However, we uncovered some interesting Black Friday trends experienced by our customers, from a fraud perspective, that are worth noting.

The bank card industry saw an increase in possible third-party fraud (individuals using stolen identity information to open credit accounts) and organized fraud attempts (fraudsters working together by sharing credentials and information to gain access to credit) in the riskiest 3% of the through-the-door population. Bank card application volume was 2.1x higher on Black Friday when compared to a standard Friday in October.

The wireless industry experienced a 2x increase in the overall volume of applications on Black Friday, as well as a 2x increase in its high-risk population. Additionally, the September 2016 iPhone release date saw an increase in likely synthetic identity fraud (i.e., fraudsters creating fictitious identities with no ties to a known consumer, making this type of fraud more difficult to identify and remediate) within the riskiest top 3% of applicants.

Fraudsters don’t take time off for the holidays. In fact, they may be capitalizing on seasonal spikes in application volume to test their ability to more easily evade fraud detection processes.